a) The economy is experiencing an inflationary output gap of $1 trillion, as the current output of $12 trillion exceeds its potential output of $11 trillion. This situation can lead to upward pressure on prices and potential inflation due to the economy operating beyond its sustainable capacity.b) As Finance Minister, implementing Keynesian economics, three tools for restoring full employment are: 1) increasing government spending on projects, 2) cutting taxes to boost disposable income and spending, and 3) using an expansionary policy combining spending and tax cuts to amplify aggregate demand and economic impact.c) To achieve a $2 trillion change in aggregate demand using the fiscal policies: 1) IncreaseGovernment Spending: Change in spending of $10trillion is needed. 2) Cut Taxes: A $10 trillion tax reduction is required. 3) Expansionary Policy:Combining spending and tax cuts, the multiplier of 10 indicates a $20 trillion change in GDP for a $2 trillion demand shift.